The Nobel Memorial Prize in Economic Sciences (officially Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne), commonly (but erroneously[1][2][3]) referred to as the Nobel Prize in Economics,[4] and as a "category of the Nobel Prize" by the Nobel Foundation itself[5] which owns the tradename "Nobel Prize",[6][7] is an award for outstanding contributions to the field of economics, and generally regarded as the most prestigious award for that field.[8] It is not one of the prizes established by the will of Alfred Nobel in 1895, but instead was established 73 years later by Sweden's central bank, the Sveriges Riksbank, on the occasion of the bank's 300th anniversary with a donation to the Foundation.[8][9][10][11] Winners are announced on the same day as other Nobel Prize winners, and receive the award at the same ceremony.[8]

An endowment "in perpetuity" from Sveriges Riksbank pays the Nobel Foundation's administrative expenses associated with the prize and funds the monetary component of the award.[12]

Since 2001, the monetary portion of the Prize in Economics has totalled 10 million Swedish kronor (during January 2008, approx. US$1.6 million; 1.1 million Euro). This is equivalent to the amount given for the original Nobel Prizes.[16][17][18] Since 2006, Sveriges Riksbank has given the Nobel Foundation an annual grant of 6.5 million Swedish kronor (in January 2008, approx. US$1 million; 0.7 million Euro) for its administrative expenses associated with the prize as well as 1 million Swedish kronor (until the end of 2008) to include information about the prize in the Nobel Foundation's internet webpage.[19]

The Prize in Economics is not one of the original Nobel Prizes created by the will of Alfred Nobel.[8][20][21] However, the nomination process, selection criteria, and awards presentation of the Prize in Economic Sciences are performed in a manner similar to that of the Nobel Prizes.[12][17][22] The Prize is awarded by the Royal Swedish Academy of Sciences "in accordance with the rules governing the award of the Nobel Prizes instituted through his [Alfred Nobel's] will",[12] which stipulates that the prize be awarded annually to "those who ... shall have conferred the greatest benefit on mankind".[23]

According to its official website, the Royal Swedish Academy of Sciences "administers a researcher exchange with academies in other countries and publishes six scientific journals. Every year the Academy awards the Nobel Prizes in Physics and Chemistry, the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, the Crafoord Prize and a number of other large prizes".[13]

Each September the Academy's Economics Prize Committee, which consists of five elected members, "sends invitations to thousands of scientists, members of academies and university professors in numerous countries, asking them to nominate candidates for the Prize in Economics for the coming year. Members of the Academy and former laureates are also authorised to nominate candidates."[12][13][24] All proposals and their supporting evidence must be received before February 1.[21] The proposals are reviewed by the Prize Committee and specially appointed experts. Before the end of September, the committee chooses potential laureates. If there is a tie, the chairman of the committee casts the deciding vote. Next, the potential laureates must be approved by the Royal Swedish Academy of Sciences. Members of the Ninth Class (the social sciences division) of the Academy vote in mid-October to determine the next laureate or laureates of the Prize in Economics.[12][13][25] As with the Nobel Prizes, no more than three people can share the prize for a given year; they must still be living at the time of the Prize announcement in October; and information about Prize nominations cannot be disclosed publicly for 50 years.[21]

The first prize in economics was awarded in 1969 to Ragnar Frisch and Jan Tinbergen "for having developed and applied dynamic models for the analysis of economic processes".[27] Until 2009, all laureates in economics had been men. In 2009, Elinor Ostrom became the first woman to be awarded the prize. All five Nobel Prizes had previously been awarded at some time to a woman.

Sylvia Nasar wrote in her book A Beautiful Mind that in February 1995, after acrimony pertaining to the awarding of the 1994 Prize in Economics to John Forbes Nash, the Prize in Economics was redefined as a prize in social science. This makes it available to researchers in such topics as political science, psychology, and sociology.[28][29] Moreover, the composition of the Economics Prize Committee changed to include two non-economists. This has not been confirmed by the Economics Prize Committee. The members of the 2007 Economics Prize Committee contradict Nasar's claim since the secretary and 4 of the 5 members are professors of economics.[30] In 1978, Herbert A. Simon, whose PhD was in political science, became the first non-economist to win the prize,[citation needed] while Daniel Kahneman, a professor of psychology and international relations at Princeton University is the first non-economist by profession to win the prize.

Some critics argue that the prestige of the Prize in Economics derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandson of Ludvig Nobel.[31] Nobel criticizes the awarding institution of misusing his family's name, and states that no member of the Nobel family has ever had the intention of establishing a prize in economics.[32]

According to Samuel Brittan of the Financial Times, both of the former Swedish ministers of finance, Kjell-Olof Feldt and Gunnar Myrdal, wanted the prize abolished, saying, "Myrdal rather less graciously wanted the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman)."[29]

In his speech at the 1974 Nobel Prize banquet Friedrich Hayek stated that had he been consulted on the establishment of a Nobel Prize in economics, he would "have decidedly advised against it"[29][33] primarily because "the Nobel Prize confers on an individual an authority which in economics no man ought to possess.... This does not matter in the natural sciences. Here the influence exercised by an individual is chiefly an influence on his fellow experts; and they will soon cut him down to size if he exceeds his competence. But the influence of the economist that mainly matters is an influence over laymen: politicians, journalists, civil servants and the public generally."[33]

Milton Friedman was awarded the 1976 prize in part for his work on monetarism. Awarding the prize to Friedman caused international protests.[36] Friedman was accused of supporting the military dictatorship in Chile because of the relation of economists of the University of Chicago to Pinochet, and a controversial six-day trip[37] he took to Chile during March 1975 (less than two years after the coup which deposed President Salvador Allende). Friedman himself answered that he never was an adviser to the dictatorship, but only gave some lectures and seminars on inflation and met with officials, including Augusto Pinochet, in Chile.[38] Milton Friedman also pointed out that there were no such protests over his visit to Maoist China (as a guest of the government) even though the socialist government of Mao had allegedly murdered tens of millions of people.

The 2005 prize to Robert Aumann was criticized by European press[who?] for his alleged use of game theory to justify his stance against the dismantling of Israeli settlements in occupied territories.[42]

In 2013 the prize was awarded to Eugene F. Fama, Lars Peter Hansen and Robert J. Shiller. Shiller claimed that Fama's efficient market hypothesis "makes little sense, except in fairly trivial ways"[43] and that "I would not, however, recommend that monetary or fiscal authorities seek inspiration from his theories on how to stabilize the economy. He doubts the existence of any bubble before this crisis, and his philosophy would have let banks fail at the beginning of it."[43]

The official Swedish name of the Prize is Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne. The Nobel Foundation's translations of the Swedish name into English have varied since 1969:

Years

Official name in English

1969–1970

Prize in Economic Science dedicated to the memory of Alfred Nobel[44][45]

^Hird., John A. (2005). Power, Knowledge, and Politics. American governance and public policy. Georgetown University Press. p. 33. ISBN978-1-58901-048-2. OCLC231997210. the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, commonly referred to as the Nobel Prize in Economics

^ abcde"Nobel Prize". Encyclopædia Britannica. 2007. Retrieved 14 November 2007. An additional award, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, was established in 1968 by the Bank of Sweden with a grant to the Nobel Foundation, and was first awarded in 1970. Thus, its winners are announced with the Nobel Prize recipients, and the Prize in Economic Sciences is presented at the Nobel Prize Award Ceremony.